Question 1

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. 
Vested rights are [ forfeitable | nonforfeitable ] rights to receive some benefits in a pension plan.

Accepted Answer

The answer of INSTRUCTIONS: Choose the word or phrase in...

Question 2

Workers who elect to retire early-at age 72-will receive reduced Social Security retirement benefits.

Accepted Answer

A) True 
 B)False

Question 3

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. 
Dan and Betty, both in their early 30s, want to withdraw $9,000 from their individual retirement account (IRA) to put toward the purchase of their first home. They [ will | will not ] have to pay a penalty.

Accepted Answer

The answer of INSTRUCTIONS: Choose the word or phrase in...

Question 4

Melissa's retirement plan is described in her employee handbook as follows:
Noncontributory
Cliff vesting (100%) after 3 years of full-time employment
Monthly retirement benefits based on average salary over the last 3 years of employment and the total number of years worked for the company
Which of the following statements about this retirement plan is true?

Accepted Answer

A)  Melissa will have to pay money into the plan. 
B)  If Melissa leaves this company before working full time for 3 years, she will not receive any benefits. 
C)  Melissa will have to make investment decisions regarding her retirement plan. 
D)  Melissa's retirement plan is a defined contribution plan. 
E)  For Melissa, vesting takes place gradually over the first 3 years of employment.

Question 5

Marcia works for Telephonic Industries and participates in its supplemental retirement plan. Last year, the firm did not earn a profit. Therefore, it did not contribute to the supplemental retirement plan. This plan is a(n):

Accepted Answer

A)  defined benefit plan. 
B)  noncontributory pension plan. 
C)  thrift and savings plan. 
D)  profit-sharing plan. 
E)  Keogh plan.

Question 6

Jamie has worked for ABC Printing for 5 years. During this period, ABC Printing has contributed $25,000 to her noncontributory retirement plan. Assuming ABC uses cliff vesting, the longest period allowed, how much will Jamie be able to roll into an individual retirement account (IRA) if she leaves ABC Printing?

Accepted Answer

A)  $0 
B)  $5,000 
C)  $10,000 
D)  $20,000 
E)  $25,000

Question 7

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. 
If Melissa converts her traditional individual retirement account (IRA) to a Roth IRA, she [ will | will not ] have to pay taxes on any earnings and pretax contributions.

Accepted Answer

The answer of INSTRUCTIONS: Choose the word or phrase in...

Question 8

Planning for retirement over a series of short-run time frames requires:

Accepted Answer

A)  stating your retirement income objectives as a percentage of your present earnings. 
B)  the retiree to wait until age 50 to start planning. 
C)  annual savings of at least $100,000. 
D)  investment of retirement funds in more risky investments. 
E)  estimating the inflation factor by reducing inflation projections.

Question 9

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. 
The period during which annuity payments are made to an annuitant is called the [ distribution | accumulation ] period.

Accepted Answer

The answer of INSTRUCTIONS: Choose the word or phrase in...

Question 10

Profit-sharing plans enable employees to participate in the earnings of their employer.

Accepted Answer

A) True 
 B)False

Question 11

Jacque Solis, a 38-year-old, is leaving her current job and would like to take a long vacation before a new job. She has $62,000 in an individual retirement account (IRA) that she would like to live on during this period. If she is in a 25% marginal tax bracket, how much will she have left after paying taxes and penalties?

Accepted Answer

A)  $40,300 
B)  $43,500 
C)  $37,700 
D)  $29,000 
E)  $14,500

Question 12

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. 
The initial estimates of retirement expenses and income should be done in [ today's | future ] dollars.

Accepted Answer

The answer of INSTRUCTIONS: Choose the word or phrase in...

Question 13

Which of the following is the principal source of income for the average retiree?

Accepted Answer

A)  Earnings from income-producing assets (such as stocks and bonds) 
B)  Earnings from full- or part-time jobs 
C)  Pension plans 
D)  Social Security 
E)  Annuities

Question 14

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. 
For most people, participation in the Social Security system is [ voluntary | mandatory ].

Accepted Answer

The answer of INSTRUCTIONS: Choose the word or phrase in...

Question 15

Marshall will need $1,250,000 in his retirement fund in 40 years at the time of his retirement. If Marshall can earn 8% annually over this period, how much does Marshall need to save annually to meet that goal? (Show all work. Round the answer to the nearest dollar.)

Accepted Answer

The answer of Marshall will need $1,250,000 in his retirement...

Question 16

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. 
[ 401(k) | 403(b) ] plans would be available for employees of a public school or university.

Accepted Answer

The answer of INSTRUCTIONS: Choose the word or phrase in...

Question 17

You would most likely purchase an annuity from a bank.

Accepted Answer

A) True 
 B)False

Question 18

If a covered worker dies, the surviving spouse can receive full survivor's benefits from Social Security if he or she is at least 60 years of age or has a dependent and unmarried child of the deceased worker in his or her care.

Accepted Answer

A) True 
 B)False

Question 19

The current trend in retirement plans is toward contributory plans.

Accepted Answer

A) True 
 B)False

Question 20

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. 
With a life annuity, period certain, a payment will be made for a stated period of time [ only to the annuitant if he or she lives | to someone else if the annuitant dies ].

Accepted Answer

The answer of INSTRUCTIONS: Choose the word or phrase in...

Exam 14: Planning for Retirement

Workers who elect to retire early-at age 72-will receive reduced Social Security retirement benefits.

Marcia works for Telephonic Industries and participates in its supplemental retirement plan. Last year, the firm did not earn a profit. Therefore, it did not contribute to the supplemental retirement plan. This plan is a(n) :

Planning for retirement over a series of short-run time frames requires:

Profit-sharing plans enable employees to participate in the earnings of their employer.

Which of the following is the principal source of income for the average retiree?

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. For most people, participation in the Social Security system is [ voluntary | mandatory ].

Marshall will need $1,250,000 in his retirement fund in 40 years at the time of his retirement. If Marshall can earn 8% annually over this period, how much does Marshall need to save annually to meet that goal? (Show all work. Round the answer to the nearest dollar.)

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. [ 401(k) | 403(b) ] plans would be available for employees of a public school or university.

You would most likely purchase an annuity from a bank.

If a covered worker dies, the surviving spouse can receive full survivor's benefits from Social Security if he or she is at least 60 years of age or has a dependent and unmarried child of the deceased worker in his or her care.

The current trend in retirement plans is toward contributory plans.